COVID-19: DECLARATION OF FORCE MAJEURE BY THE DPR: CAN OPERATORS, CONTRACTORS AND SERVICE PROVIDERS IN THE NIGERIAN OIL AND GAS INDUSTRY RELY ON THE SAME?
The DPR, in a recent notice to Oil and Gas industry operators, contractors and service providers, introduced measures to be taken immediately in relation to activities at project and construction sites in the Industry. The DPR also declared that “the current situation is considered “force majeure” to ensure the safety and welfare of all personnel and to contain the spread of COVID-19”. Undoubtedly, the action of the DPR in introducing these measures is noble and should be applauded. However, a fundamental legal question that arises is whether DPR’s force majeure declaration can legally protect entities in the Industry in the absence of specific force majeure clauses in their underlying contracts?
Following the outbreak of the novel coronavirus (COVID-19), we have been monitoring the unfolding situation closely, while being proactive. Although the incidence rate as currently reported in Nigeria is minimal, we are still taking all necessary precautions to keep our staff, clients, vendors and all visitors to our offices safe. Consequently, our staff will be working remotely from Monday, 23 March.
PRESIDENT BUHARI RESTRICTS THE DOCKING OF CARGO VESSELS AT THE NATION’S PORTS DUE TO COVID-19 PANDEMIC
The President of the Federal Republic of Nigeria, His Excellency, Muhammadu Buhari, addressed the nation on 26th March 2020 concerning the COVID-19 pandemic. During his address, the President directed that only cargo vessels that have been at sea for more than 14 days be allowed to dock in the country’s ports, subject however to testing by the Port Health Authorities of the crew on board for COVID-19 and their confirmation as disease-free.
THE FEDERAL COMPETITION AND CONSUMER PROTECTION COMMISSION (“FCCPC”) GUIDELINES ON FOREIGN TO FOREIGN MERGERS: A NOTE TO FOREIGN TRANSACTION ADVISORS
On 13 November 2019, the FCCPC published its Guidelines on Simplified Process for Foreign to Foreign Mergers with Nigerian component (the “Guidelines”). The Guidelines were issued further to the extension of the reach of the FCCPC to M&A transactions involving a change of control of businesses, parts of businesses or any assets of businesses, in Nigeria.1 The Guidelines essentially cater to the procedural matters pertaining to prior notification, requisite information, documentation of notification and applicable fees.
MULLING OVER THE NEW PRODUCTION SHARING CONTRACTS FISCAL REGIME AS THE AMENDMENT ACT TO DIBPSA IS PASSED INTO LAW
In what may ostensibly be seen as a reaction to the Supreme Court judgment of October 2018, which ordered the Federal Government of Nigeria (“FGN”) to carry out an upward review of its revenue share under relevant production sharing contracts ("PSCs"), the Federal Government of Nigeria ("FGN") has, on 4th November 2019, passed an amendment (the "Amended Act") to the Deep Offshore and Inland Basin (Production Sharing Contracts) Act, No. 9 of 1999 ("DIBPSA" or "Principal Act"). The Supreme Court had on 17th October 2018 delivered a consent judgment in the case between the Attorney-General of Rivers State & 2 Others vs Attorney-General of the Federation (suit no. SC964/2016) in which the FGN was mandated to increase its share of revenue under the PSCs whenever the price of crude oil exceeds US$20 per barrel in line with Section 16 (1) of the DIBPSA. The suit was instituted by the Rivers, Bayelsa and Akwa-Ibom State Governments (in the names of their respective Attorneys General) who had approached the Supreme Court for the interpretation of Section 16(1) of the DIBPSA.
KEY FEATURES OF THE JOINT ADVISORY AND GUIDANCE ON MERGERS, ACQUISITIONS & OTHER BUSINESS COMBINATIONS NOTIFICATION
On the 30th of January 2019, President Muhammadu Buhari signed the Federal Competition and Consumer Protection Act 2018 (“FCCPA”) into law. The FCCPA repealed the Consumer Protection Council Act 1992 and created the Federal Competition and Consumer Protection Council (“FCCPC”) in place of the Consumer Protection Council. Prior to the enactment of the FCCPA, mergers and acquisitions (“M&As”) in Nigeria were generally regulated by the Investments and Securities Act, 2007 (“ISA”) with the Securities and Exchange Commission (“SEC”) having regulatory oversight. Presently, the FCCPA has repealed the provisions of the ISA that authorised the SEC to conduct assessments and approve M&As. These powers are now to be exercised by the FCCPC. Specifically, the FCCPC is vested with the powers to review all mergers and business combinations to ensure that such combinations do not distort or impede the markets; a function which was previously handled by the SEC.
MEMBERSHIP OF A COMPANY LIMITED BY GUARANTEE - KEY FEATURES
Introduction Among the different company types which can be incorporated in Nigeria pursuant to the provisions of the Companies and Allied Matters Act (“CAMA”)1, the company limited by guarantee appears to be the one with a less known and far less understood structure. Because it is called a “company”, many are quick to equate it with a company having share capital and shareholders. A company limited by guarantee (“Company Ltd/Gte”) has unique features which distinguish it from a company limited by shares, especially with regard to the liability of its members. The purpose of this article is to highlight these unique features of a company limited by guarantee and the provisions of Nigerian company law on its membership.
HIGHLIGHTS OF THE GUIDELINES FOR GRANT OF PERMIT TO ACCESS FLARE GAS
The Guidelines for Grant of Permit to Access Flare Gas (“PAFG Guidelines”) was issued by the Department of Petroleum Resources (“DPR”) on 27th December 2018 to, amongst other things, provide a framework for an open competitive bid process (“Bid Process”) for the grant of permits by the Minister of Petroleum Resources (“Minister”) to Nigerian registered companies to take Flare Gas on behalf of the Federal Government of Nigeria (“FGN”) from one or more specified sites (“Permit to Access Flare Gas”). The PAFG Guidelines also sets out the rights and obligations of a holder of a Permit to Access Flare Gas (“Permit Holder”).
THE FLARE GAS (PREVENTION OF WASTE AND POLLUTION) REGULATIONS, 2018 – WHAT IS NEW?
According to Maikanti Baru, the Group Managing Director of the Nigerian National Petroleum Corporation, petroleum operators currently flare about 700 million standard cubic feet (“scf”) of gas per day, which could generate 5,000 megawatts of electricity daily. At about $3.81 per 1,000scf of gas and using an exchange rate of N306.35 to $1.00, Nigeria loses an economic benefit of approximately N817million daily due to gas flaring.
HIGHLIGHTS OF THE REVISED INCOME TAX (TRANSFER PRICING) REGULATIONS 2018 AND THE GUIDELINES ON TRANSFER PRICING DOCUMENTATION
The Federal Inland Revenue Service (“FIRS”), on 19 March 2018 and 20 September 2018, released the revised Income Tax (Transfer Pricing) Regulations 2018 (the “Revised TP Regulations”) and the Guidelines on Transfer Pricing Documentation (“Guidelines”) respectively.